The Social Security Administration reports that 62% of retired Americans rely on their benefits for at least half of their income stream, with about a third of Americans relying on Social Security for almost all their post-working income. Only one in 10 people don’t depend on Social Security at all for income, when they are retired.

Your retirement benefits are based on your 35 highest earning, inflation adjusted, years. To max out, you’ll need to have worked for 35 years. Years with zero income can impact your overall totals.

Birth year is another factor. That determines your Full Retirement Age (FRA), the year that you become eligible to receive your full retirement benefit. Claim earlier, and you risk permanently reducing the monthly benefit by as much as a third. Claiming after your FRA could boost benefits by 32%.

Most people do start claiming Social Security benefits before their FRA, for a variety of reasons. Sometimes it’s because they have lost their job, are over 60 and can’t get hired. Some people simply don’t know that the longer they wait to claim, the higher their benefits will be. What is clear is that 60% of retired workers in 2013 took their benefits between 62-64, with another 30% claiming between 65-66. One in 10 workers took benefits after their FRA.

There has been a change in recent years. While more people are waiting longer to claim their benefits, fewer are waiting until their FRA. The reason is tied to the headlines. People are worried that Social Security is going to be cut, and they want to get the income they can while the agency is still fully funding benefits.

The 2018 Trustees Report (officially, "The 2018 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds”) said the agency will pay out more than it collects in 2018, the first time this has occurred since 1982. The net cash outflow is expected to grow faster starting in 2020, and then by 2034, the $2.89 trillion in assets may be gone. Congress will need to act, or benefit cuts to all retirees will have to be made—by as much as 21%.

Can anyone know what will occur between now and 2034? Congress could fix any concerns by passing a bill that solves the problem, and those who claim early will be left with smaller benefits. We also don’t know when we are going to die. The decision of when to claim must be made by each individual, based on their FRA, their other sources of retirement income and their expectations for the future.

An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances.

12/18/2018

For many years, if you wanted to get an answer from the Social Security Administration you had to have a lot of patience but that problem is likely to have some relief, according to The New York Times in “Have a Social Security Question? Please Hold.”

Part of the problem in recent years, has been an eight-year reduction in the agency’s operating budget. Congress has reduced the agency’s budget 9% in inflation-adjusted terms since 2010. This is happening at the same time that the number of Americans receiving benefits from Social Security is on the rise—by 17%, according to Social Security Administration data.

The good news is that the agency’s budget is now increasing, and it hopes to start decreasing the backlogs. It is hard at work modernizing the agency’s use of technology, addressing customer service needs and enhancing online options for the public.

Congress finally started to reverse the downward funding trend in March. Lawmakers ignored the administration’s request for a small increase in fiscal 2018 and instead, raised the administrative budget by 4.6%—$480 million. In September, Congress ignored the administration’s request for a $400 million cut and instead, gave Social Security a $40 million increase.

That means that in fiscal 2019, the agency’s operating budget will be $11.1 billion.

This government agency touches the lives of millions of Americans and its ability to function efficiently is extremely important to people of all ages. In fiscal 2019, the Social Security Administration projects payments of $1.1 trillion to about 69 million recipients of disability benefits, Supplemental Security, Income and Social Security retirement benefits.

As for calls from Americans with questions, Social Security reports that it will serve about 43 million visitors at the remaining field offices and handle as many as 75 million calls to the toll-free telephone line.

As the nation ages, those numbers are only going to increase. Over the coming decades, the agency expects the number of beneficiaries to soar by 45%.

The backlog in appeals cases for Social Security Disability Insurance has grown in the years that the agency’s budget was being cut. The average time to wait for a hearing decision on an appeal in fiscal 2018 was 591 days. That was 39% longer than in 2010, although a slight decrease from 2017.